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If a Large Increase in the Wage Rate Leads to a Net

Question 144

Multiple Choice

If a large increase in the wage rate leads to a net increase in the use of capital by a firm,then


A) the substitution effect outweighed the output effect.
B) the output effect outweighed the substitution effect.
C) the substitution and output effects are equal.
D) there is no way to estimate the relative size of the substitution and output effect.

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